There could be a cash cow under your floorboards – your basement. While it will take an initial investment, renovating your basement to become a rental apartment can turn into a real source of income.
Whether you’re buying your first home or have been wondering for years what to do with that empty basement, you may want to think about turning it into someone else’s home.
Here are a couple of questions to ask yourself before deciding to turn your basement into a rental space:
- Is this the right house for me to be doing a basement renovation?
If the basement is unfinished, make sure you are willing to put the effort into this particular home to renovate that space. Is this a property you can see yourself settling down in, or is it just a starter home? If you can see yourself living in this property for a long time or can envision yourself getting some other use out of the place, like reselling the entire home or turning it into a rental property, then renovating the basement is something you’ll likely want to think about.
- Is there something else I’d prefer to use the basement for?
Make sure there’s nothing else you’d prefer to use the basement for, like a home office, children’s playroom or movie den.
- Could I use the extra income?
Most people will probably say yes to this. Having a rental apartment can help pay off your mortgage and add to your savings. Think about your own financial situation and decide if having the extra income is important to you.
- Do I mind sharing my home with other people?
This is perhaps one of the most important factors to consider. Whether the entrance to the basement is separate from your house’s main entrance or not, you will be sharing your home with someone else – likely someone you have never met before. Only you can decide if this is something you will be comfortable with.
If and when you do decide to turn your basement into a rental apartment, the next step will be to determine the budget for the project. There are legal standards that need to be met when turning your basement into a livable, rentable space, so on average, it may take you anywhere from $3000-$6000 to properly turn an unfinished basement into a livable space. This step may scare you but you have to realize that you are investing your money, rather than flat out spending it. The money you spend on renovations will eventually come back from the rental income. This is the best benefit of owning an income property. Any initial money spent will come back easily after six months to a year of renting.
On average, homeowners charge from $600/month to $2500/month depending on the size of the space, the desirability of the location, whether or not the place is furnished and any other amenities. After breaking even, you can expect all the income that follows to be strictly yours. Some people use it to pay off their mortgages faster, while others simply use it as additional income. A project like this may cost you initially, but the payback will be worth it.
If you want to inquire about turning your basement into a possible income property, contact an associate from domilya GROUP at 647.300.1242 or visit www.domilyaGROUP.ca